If the COVID-19 pandemic has taught us anything, it’s that supply chains can make or break your business. With all the uncertainty, now is the time to evaluate the success, reliability and profitability of your company’s current supply chain.
To address disruption and avoid costly production interruptions, many firms are undertaking strategic cost-benefit and risk analyses to compare sourcing strategies from different geographic locations. As a result, more companies are shortening their supply chain to reduce cost and risk.
Buying, investing, building or processing closer to where the producers or consumers are will provide:
Many factors influence the total cost of doing business; it’s time for firms to take a broader view. Are you assessing your supply chain costs accurately?
If you’re making sourcing decisions solely based on price, you could be missing 20-30% of your actual offshoring costs. As part of its Assess Costs Everywhere program, the U.S. Department of Commerce provides a free Total Cost of Ownership Estimator that helps companies account for all relevant factors—overhead, balance sheet, risks, corporate strategy and other external and internal business considerations—to determine the true total cost of ownership.
Using this information, companies can better evaluate sourcing and identify alternatives—or make a stronger case for themselves when selling against offshore competitors. To see this in action, take a look at the case studies from companies already engaged in reshoring.
(For example: If you’re engaged in the food supply chain, freshness matters! Buy, invest, build and process closer to where the producers are—right here in Kansas!)